FMCG companies tap Middle East growth

08 May 2013

DUBAI: Unilever, Nestlé and Coca-Cola are among the international FMCG companies targeting the Middle East and North Africa, increasing production there as the territory benefits from rising incomes and a growing population.

"As the region becomes bigger it makes more sense to have production near the market," Abhik Gupta, Nielsen director for the Middle East, North Africa and Pakistan, told The National.

"We see a lot of these companies investing in Egypt and in the Gulf Co-operation Council, and as these economies grow they are likely to consider opening output here," he added.

Arijit Ghose, Unilever Gulf's managing director, confirmed the trend. "At the moment we get 35% of our products from outside the region," he said, "but as we grow and get critical mass more of those products will come onshore."

He also pointed to the tax advantages from such a move, as the Greater Arab Free Trade Area allowed for lower tariffs on the flow of goods in the region.

Nor was he deterred by the region's recent history of political unrest. "The Arab Spring is a social phenomenon, which is not the first social phenomenon we've encountered in the region," he noted, adding that the company continued to do well in Egypt, Libya and Tunisia.

"In Egypt 100% of our business is growing market share," he said. And he suggested that as the economic situation of the 50% at the bottom of the pyramid improved "Egypt has the potential to become the most important market for Unilever".

Nestlé echoed this confidence, with Lynn Alkhatib, a media relations manager, declaring: "Nestlé Middle East is an important growth engine of our company globally."

The firm is also planning a major investment in Dubai. "Producing locally allows us to bring products faster and therefore fresher to consumers," said Alkhatib. "This is a clear advantage we have already experienced with our many manufacturing plants in the Middle East."

Nielsen's Gupta also addressed the region's stability and compared it favourably with Africa. "Mena has better infrastructure and by and large is more stable than Africa," he said.